What’s going on is that, at any fixed cost per unit of land, you’re almost always better off building bigger, more expensive units. So, as long as land is hard to find and expensive, that’s what developers will do.

If you want developers to build housing for middle and lower income people without being subsidized, then you need to up-zone neighborhoods. By increasing the supply of buildable land, you decrease the per unit land cost. Then, once developers saturate the luxury market (because that’s still where the highest margin is), they will move on to saturate the middle and (possibly) lower income markets.

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Moses Kagan

Hi there. My name is Moses Kagan. Through my company Adaptive Realty you can gain access to local area knowledge and deals in real estate. If you're looking to buy, renovate, manage or sell apartment buildings in Southern California, you're in the right place.